Understanding The Deed Of Trust And The Role It Plays
Much like quit claim deeds the deed of trust play an important role when it comes to real estate transactions. Here's a look at the role it plays.
Every home loan applicant knows about the various papers that they must fill in and affix their signatures with when they close a home and property purchase. However, by practice, not everybody finds the time to read or even at least browse through the documents presented to them. Concerned with getting things done and over with, they just end up not reading the entries on the fine print.
Buyers should make it a practice though to make sure that they have read and understood what is printed on every paper that they sign. Most often than not, more than half of those who went through the process in getting home loans and signed a Deed of Trust do not know the provisions that are listed there and are unaware about how it can affect them if certain circumstances should arise.
For those who do not have that much idea about what this document is, this is a document that will serve as the security for the loan that has just been granted to you. The provisions within states that the property has been encumbered by the lending firm that granted you the loan, and it will be stored in the public records, specifically in the clerk or county recorder where the property as located as evidence for the agreement.
There are three parties that are involved in a Deed of Trust. There is the trustee, the trustor or the borrower, and the beneficiary or the lender. The agreement among the three parties will state that the legal title for the property that the borrower will be purchasing using the money granted to him by the lender, will be transferred to the trustee.
This process is essential to make sure that the beneficiary or the lender will be able to get a security for the money that he is letting the borrower to avail in case he fails to pay back what he owes. Although this transaction is somewhat similar to mortgages, the main difference is that this process involves three parties, and the title is not directly granted to the lender, but to a third party.
There are certain points that will be defined in the document. Among the most important provision included are the original amount that has been accorded to the borrower, description about the property used as security, the parties that are involved, the date when the loan matures, requirements and other provisions on the financial assistance, late fees, and such other legal procedures that will be taken should any party breach the agreement that they have signed.
Every borrower should be aware that the Deed of Trust gives the trustee the power over the property being held. In cases where the borrower defaults on the necessary payments that should be made, the trustee can order foreclosure to a property on behalf of the lender beneficiary. However, if the borrower has successfully settled the agreement, the trustee will immediately reconvey the property to him.
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The deed of trust is reviewed at the site if you would like a more complete evaluation. Similarly, quit claim deeds are also reviewed for your convenience.